Scottish business leaders claim there is little evidence to support claims that banks are doing all they can to support struggling businesses despite Government pressure.

The tension between banks and businesses has continued to rise over the past week with the Government announcing plans to bring together the two parties to thrash out their differences.

The Scottish divisions of the CBI and Federation of Small Businesses are reporting in some cases a near trebling of borrowing rates over the past few months.

Banks are also reported to be charging arrangement fees to business customers who are being forced to renegotiate the terms of their lending agreements.

Colin Borland, right, of the Scottish Federation of Small Businesses, says its members are reporting a breakdown in the longstanding relationships they have developed with their banks.

And Scottish Chambers of Commerce chief executive Liz Cameron said it is hearing reports from its members of significant increases in the cost of borrowing.

However, the British Bankers' Association (BBA) says the UK's leading high street banks are promising to continue to support small businesses through the economic downturn

With Prime Minister Gordon Brown and Bank of England Governor Mervyn King confirming that the UK was sinking into recession this week, businesses in Scotland are facing tougher times already.

Today, UK GDP figures for the third quarter of the year are due to be published which are likely to show negative growth. Scottish GDP fell by 0.1 per cent in the second quarter of the year and it is likely to follow suit.

Figures published by the BBA suggest an 11 per cent growth in business borrowing at £44billion and a three per cent rise on borrowing through overdrafts.

Angela Knight, chief executive of the BBA, said: "The UK banking industry has always been and remains a strong supporter of small businesses.

"But we have to be clear that as talk turns to recession it seems inevitable that some businesses will not survive, even with the best assistance that banks, government and voluntary agencies can give them."

However, Mr Borland said the banks are squeezing the very small businesses which are "going to help trade us out of the tough situation financial institutions had left behind".